The change in financial support for solar power has been highly controversial and has seen the government lose a high-profile legal case in the high court. The new data lends support to the charge of some in the solar industry that the government cut the subsidy too far and too fast, endangering thousands of jobs. Ministers have defended their actions, saying the scheme they inherited from the previous government was poorly set up and was too costly for the energy customers who ultimately foot the bill.

Since 1 April, the amount paid to those installing solar panels fell from 43p/kWh of energy generated, to 21p/kWh. In the three weeks since then, an average of 2.4MW of solar photovoltaic capacity has been added each week – 87% down from the weekly average for the previous year of 18MW.

Greg Barker, the Conservative minister responsible for the solar subsidy scheme, said the changes aimed to end “solar booms” and busts: “The whole point of my reforms is to bring in a much greater degree of certainty and predictability.” He has set an ambition to have 22GW of solar capacity installed in the UK by 2020.

Caroline Flint, the shadow energy and climate change secretary, claimed on Tuesday that this target would take 169 years to reach at the current rate. “For months Labour has been warning that the government’s cuts to solar power would destroy thousands of jobs, cut off a green hi-tech British industry and stop families controlling soaring energy bills. These shocking figures prove that because of the government’s cuts, it will take a staggering 169 years for us to reach our targets for solar power.”

Paul Barwell, chief executive of the Solar Trade Association, said: “We’ve seen drops in installation with every policy adjustment, but we expect this one will take a bit more time to pick up.” He said the reason take-up would take longer this time is the new requirement that homes must be reasonably energy-efficient before being entitled to solar panel subsidies – a requirement met by about half of homes.

“Many householders are aware that government has slashed subsidies,” Barwell added. “The challenge for us is to make householders aware that’s partly because industry has slashed costs, and partly because solar is so popular. There is no doubt that financially solar remains a great prospect for UK homeowners so there is no good reason why the UK market should stagnate.”

All sides agree that subsidies had to be reduced because the costs of solar panels continue to drop rapidly: the argument was about the speed and scale of the cut.

In his first significant remarks on green policy last week, prime minister David Cameron appeared to address the uncertainty caused in the renewables industry by the changes to the feed-in tariff. “When we have made a commitment to a project, we will always honour it in full,” he told energy ministers from around the world on 26 April

Originally published on The Guardian. 

Here at Solarfeedintariff.co.uk, we would like to see the government support the solar industry more comprehensively and understand that investment needs concrete figures and not hollow promises to work from. The insistence of energy efficiency within the home prior to the tariff being granted limits the number of rooftops where solar panels can be fitted and damaged growth in the industry.

We hope the 22GW capacity mentioned by Mr Barker is strived for and we would like to see more action to support the decentralization of  energy within the UK

A five-person panel have been discussing the preferential rates, known as feed-in tariffs, since March 6 and will hold their sixth meeting on April 25.

Japan’s Ministry of Economy, Trade and Industry hopes to receive the recommended rates by April 27, which will then need government approval, Keisuke Murakami, who heads clean energy programs at the ministry, said today.

The feed-in tariff guarantees above-market rates for solar, wind, geothermal, biomass and hydroelectric power. The Japan Photovoltaic Energy Association proposed 42 yen (52 cents) a kilowatt-hour for 20 years for solar power. For wind, the Japan Wind Power Association suggested as much as 25 yen a kilowatt- hour for the same period.

Murakami said no decision had been made about rates for solar power in response to a Nikkei newspaper report today that said the rate will be 42 yen a kilowatt-hour for about 20 years. The newspaper didn’t state the source of its information.

By : Bloomberg

The appeal was against a High Court ruling blocking government plans to make large reductions to payments made to households with solar panels.

It would have hit customers who installed panels after 12 December.

Under the feed-in tariffs programme, people in Britain with solar panels are paid for the electricity they generate. The government tried to reduce them prior to the results of the consultation being released. The High Court agreed with opponents that this was legally flawed.

The new tariff of 21p per kilowatt-hour, down from the current 43p, had been expected to come into effect from 1 April, but in October the government said it would be paid to anyone who installed their solar panels after 12 December.

Upholding that ruling, the Supreme Court said the government’s appeal “does not raise an arguable point of law of general public importance which ought to be considered by the Supreme Court at this time”.

The government said the court’s decision drew a line under the case.

“We will now focus all our efforts on ensuring the future stability and cost effectiveness of solar and other microgeneration technologies for the many, not the few,” said Energy and Climate Change Secretary.

Here at solarfeedintariff.co.uk we applaud the High Courts judgment and hope it encourages fairer and better planned legislation from the government In the future when amending renewable energy policy.

The reforms will provide greater confidence to consumers and industry investing in exciting renewable technologies such as solar power, anaerobic digestion, micro-CHP, wind and hydro power.

The Feed-in Tariffs (FITs) scheme provides a subsidy, paid for by all consumers through their energy bills, enabling small scale renewable and low carbon technologies to  compete against  higher carbon forms of electricity generation.

The surge of solar PV installations in the latter part of last year, due to a 45% reduction in estimated installation costs since 2009, has placed a huge strain on the FITs budget.

Climate Change Minister Greg Barker said: “Today we are announcing plans to improve the Feed-in Tariffs scheme. Instead of a scheme for the few the new improved scheme will deliver for the many. Our new plans will see almost two and a half times more installations than originally projected by 2015 which is good news for the sustainable growth of the industry.  We are proposing a more predictable and transparent scheme as the costs of technologies fall, ensuring a long term, predictable rate of return that will closely track changes in prices and deployment.

“I want to see a bright and vibrant future for small scale renewables in the UK and allow each of the technologies to reach their potential where they can get to a point where they can stand on their own two feet without the need for subsidy sooner rather than later.”

A BETTER FIT SCHEME FOR CONSUMERS AND COMMUNITIES

• A tariff of 21p/kWh will take effect from 1st April this year for domestic-size solar panels with an eligibility date on or after 3rd March 2012. Other tariff reductions apply for larger installations.
• The Department has listened carefully to feedback on the energy efficiency proposals that we put forward in the consultation of 31st October. Properties installing solar panels on or after 1st April this year will be required to produce an Energy Performance Certificate rating of ‘D’ or above  to qualify for a full FIT. The previous proposals for a ‘C’ rating or a commitment for all Green Deal measures to be installed was seen as impractical at this stage. We estimate that about half of all properties are already eligible for a ‘D’ rating.
• From 1st April 2012, new ‘multi-installation’ tariff rates set at 80% of the standard tariffs will be introduced for solar PV installations where a single individual or organisation is already receiving FITs for other solar PV installations. This reflects the lower costs of such installations, as they benefit from the economies of scale. Based on the feedback  received, the threshold is set at more than 25 installations. Individuals or organisations with 25 or fewer  installations will still be eligible for the individual rate. DECC is now consulting on a proposal that social housing, community projects and distributed energy schemes be exempt from these multi-installation tariff rates.
• The tariff for micro-CHP installations will be increased to recognise the benefits this technology could bring and to encourage its development.

A BETTER FIT SCHEME FOR INDUSTRY

• In line with the evidence of falling costs for solar PV, DECC is proposing to peg the subsidy levels to cost reductions and industry growth to provide more certainty for future investments.  This will ensure that subsidy levels keep in step with the market. It builds on the best of the existing German system and will remove the need for emergency reviews.
• Using budget flexibility to cover the overspend resulting from high PV uptake this year, while still allowing £460 million for new installations over the Spending Review period. This won’t have any impact on consumer bills beyond the agreed overall cap on renewable subsidies as it will primarily be funded from an under spend on the budget allocated for large-scale renewables.

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The Government is now seeking permission to appeal to the Supreme Court. Friends of the Earth says the move will create yet more uncertainty for solar firms and after two courts have ruled their move illegal is urging Ministers to concentrate on safeguarding the industry rather than wasting more time and money on further appeals.

The High Court ruled shortly before Christmas that Government plans to cut payments for any solar scheme completed after 12 December – 11 days before the official consultation closed – were unlawful. The judgement followed legal challenges brought by Friends of the Earth and two solar firms, Solarcentury and HomeSun, last month.

Today’s judgement will prevent Ministers rushing through cuts to feed-in tariff payments in future, restoring some confidence to the UK’s clean energy industry. But Friends of the Earth warns that unless Ministers change other parts of their solar subsidy proposals, up to 29,000 jobs could be lost.

Friends of the Earth is urging Ministers to find more money – paid for from tax payments the industry generates – to safeguard the long-term stability of the solar industry. The environmental campaigning charity is also calling for crucial amendments to proposed Government solar payment changes, including re-examining over-strict energy efficiency rules that will prevent 90 per cent of houses from claiming solar subsidies.

Today’s ruling means that, subject to any further appeal to the Supreme Court, solar tariff payments will remain at 43.3p (p/kWh) until 3 March 2012 when – following Government moves last week – they will fall to 21 pence.

Friends of the Earth’s Executive Director Andy Atkins said:

“This landmark judgement confirms that devastating Government plans to rush through cuts to solar payments are illegal – and will prevent Ministers from causing industry chaos with similar cuts in future.

“The Government must now take steps to safeguard the UK’s solar industry and the 29,000 jobs still facing the chop.

“Ministers must abandon plans to tighten the screw on which homes qualify for solar payments – and use the massive tax revenues generated by solar to protect the industry.

“Helping more people to plug into clean British energy will help protect cash-strapped households from soaring fuel bills.”

With two significant reductions in the feed-in tariffs for commercial systems taking place within the last twelve months, it’s understandable that the UK industry is taking stock of what has occurred. It’s obvious now that the government incentives introduced for commercial solar power were too generous to sustain. It’s also becoming increasingly evident that the Department of Energy and Climate Change(DECC)  will use its power to swiftly alter government incentives when they deem necessary. What needs to be contemplated forwards from this is that with an experienced and industry conscious awareness commercial solar power can still establish viability in the UK. This article will explain why.

Utilising the economies of scale and potentially significant savings that companies and business owners can make on their energy usage, the commercial market holds a great deal of potential for investors. There are nuances to consider however, and the handling of the feed-in tariff incentives by the UK Government has not added to the security of the prospect for many people. This does not mean that potential projects have become more risk than their worth, it simply means that project management must protect investments using the lessons of the past and innovations of the future to minimise risk and maximise gain. Sound like a familiar set of circumstances for most kinds of investment? It is, so let’s analyse this in greater detail.

The Current State of Commercial Solar Incentives

Feed-in Tariffs

All information provided in this article is based on the proposed changes to the feed-in tariff, outlined on the DECC website here.

There are two purely financial benefits that arise from the feed-in tariffs.

1. The ‘Generation Tariff’ is paid for every kWh generated by an eligible system whether it is used on site or exported to the grid. The proposed new rates are:

• Tariff for >4-10kW PV installs = 16.8p/kWh (in year one*)
• Tariff for >10-50kW PV installs = 15.2p/kWh*
• Tariff for >50kW – 150kW = 12.9p/kWh*
• Tariff for >150kW – 250kW = 12.9p/kWh*
• Tariff for >250kW – 5MW = 8.5p/kWh*

*This rate will only apply for the first year of the systems operation. It will then increase based on the Retail Price Index’s (RPI) inflation over it’s 25 year lifespan.

2. The second aspect is the ‘Export tariff’, and this remains unchanged from the DECC proposals. It is a flat rate of 3 pence per kWh generated from an eligible system, unused on site and sent onto the grid.

Energy Savings

The third benefit that comes directly from generating solar energy from a system concerns the energy usage and bills on site. Earnings can be significant, and are established when property owners compare the new tariff rates with current bills. The rise of energy prices make this aspect of clear benefit, and just as importantly more effective the sooner the installation is carried out.

The ‘Energy Bill Savings’ are calculations on what the cost would have been to buy a kWh from the grid when it is instead generated from the solar power system and used on site. More complicated to calculate because it relies upon an analysis of the tariff times and rates of the properties energy bills, a Solar Selections Commercial Broker is trained to assist customers with establishing these figures and their influence on rates of return.

There are also a number of environmental, corporate image and sustainability benefits that are associated. Solar Selections Commercial designs projects that take into account these goals and provides suggestions for how to maximise their impact on the installation. It’s case specific, and again best discussed with your project managing broker.

Primary Areas of Development and Potential

Finance

The reality of many investment opportunities is that they are often capitalised upon during unexpected times. So long as the commodity in question is deemed to be a) increasing in value, b) possessive of a rare quality and c) stable, investment will find it and want to share in the profits. Commercial solar power is an investment in renewable energy, and all three aspects are most definitely upheld by this commodity. Renewable energy is considered a viable investment in the world today, and this is upheld despite the tariff changes in the UK.

For these reasons, private investment is expected to come into focus for the commercial market here moving into 2012. Through conglomerates and syndicates lines of capital are being opened up across the UK for these projects, through firms such as Solar Selections. These lines of capital will come into play as soon as the appropriate figures regarding returns on investment are established. So let’s look at some ideas on how this can happen.

Suggestions

First of all, the price per watt of solar components needs to continue to be driven down. In the UK we have excellent prices considering our almost complete lack of onshore manufacturing and assembly plants, but more can be done. One stigma that immediately needs to be overcome is the focus towards brand name solar products, especially on panels. Distributors and importers alike need to develop more robust relationships with the largest manufacturers in the world such as Suntech, Trina, JA Solar, Yingli and First Solar and educate their customers on the technical differences and advantages on these modules. Moreover, the public need to be educated on the differences between panel brands in a more objective manner.

Secondly, finance when sourced for large scale solar installations needs to become more comprehensively advantageous to business. Zero upfront capital outlay, tax benefits and perpetually positive cash flow positions are a small number of unique approaches as yet unexplored by the mainstream finance market; see our full article for further details. Solar Selections Commercial is in the process of introducing an exclusive package currently operating in our other countries for our clients that addresses these points and many more benefits. We encourage interested parties to contact our commercial management team for further information.

Finally, there are the more generalised energy efficiency and sustainability overhaul approaches to commercial properties that are to be more widely and professionally used. This involves considering a complete energy efficiency upgrade plan for a property with solar energy merely one aspect among a wide range of implementations to be considered. By way of example this may include installing energy efficient/motion activated lighting and monitors, condensing CPU and modem hardware into micro-managed energy efficient hardware and software, advanced telecommunication and video link software to curb travel and conference logistic costs and simpler measures such as anti-draft stoppers under doors or power point energy savers. Considering the DECC’s proposals regarding implementation of Environmental Performance Certificates (EPC) into eligibility for the solar feed-in tariffs, such practices may indeed become necessary for solar projects with the coming of 2012.

EPC’s are essentially a summary of a property’s energy efficiency and carbon dioxide emissions. They are used as ratings for all properties bought, sold or rented in the UK. The DECC’s suggestions have centred around only allowing properties with certain minimum EPC ratings to be eligible for solar FiT’s, effectively closing off the tariffs to properties judged too inefficient.

Once again, Solar Selections will be at the forefront of this approach offering options from our network of energy management consultancy firms to our clients that comprehensively address energy efficiency and emission standards.

Conclusion

A midst the controversy and decisive nature of the UK government’s cuts to the solar feed-in tariffs last year, the truth of the matter is that it has been the most successful 12 months in the solar industry’s history. The Commercial solar industry has experienced only a glimpse of it’s true potential, and whilst it is hard for some installers and potential investors to see right now, the sector has its best years ahead of it. By developing and utilising proven approaches to aspects such as finance, energy use reduction and energy efficiency, feasibility will be re-established and become accessible to many thousands of business owners and investors. The international examples are there for all to see, and with the exciting development of prospects such as our Operational Lease arrangement, Solar Selections will be at the helm of the budding commercial solar industry of 2012 and beyond.

Written by Jarrah Harburn

jarrah@solarselections.co.uk

T: 0844 567 9835

The green campaigning charity said the Government must introduce a clear plan to reduce solar power payments in line with falling installation costs, rather than prolonging industry uncertainty and jeopardising jobs by pursuing an expensive legal appeal.

Following a legal challenge by Friends of the Earth and two solar firms Solarcentury and HomeSun just before Christmas, the High Court ruled that the Government’s plans to rush through sudden cuts to solar payments – before its own consultation had ended – were illegal.

The court refused permission for an appeal on the basis that the Government has no realistic prospect of winning. The deadline for lodging an appeal is 4pm tomorrow, 4 January 2012.

Friends of the Earth is also calling on Ministers to reduce tariff rates in a planned way from February 2012 to protect jobs, and to increase the overall budget for the feed-in tariff to allow more people – including poorer households and community groups – to benefit from solar power.  The group says this is possible without any additional cost to bill payers because of the increased tax revenue the scheme is generating.

Friends of the Earth’s Head of Campaigns Andrew Pendleton said:

“The Government’s illegal cuts to solar tariff rates have near-crippled an industry and threatened thousands of jobs.

“Trying to appeal the High Court’s ruling is an expensive waste of taxpayers’ money – the court says the Government has no realistic chance of winning, and it will prolong uncertainty among solar companies just when they need reassurance.

“Ministers should accept the High Court’s decision and end business uncertainty and protect jobs with a clear plan to reduce payments from February, in line with falling installation costs.

“The Government must expand the scheme overall – with all the tax revenue the scheme generates, this can be done at no extra cost to bill payers.”

The court agreed that proposals to cut feed-in tariff payments for any solar scheme completed after 12 December – 11 days before the official consultation closed – were unlawful.

Friends of the Earth is urging the Government to come up with a new proposal which would allow solar payments to fall in line with reduced installation costs, while ensuring the solar industry continues to play a key part in developing a cleaner future.

The environmental campaigning charity is also calling for more money to encourage solar installations – paid for by the revenue the industry raises for the Treasury, the removal of planned restrictions that would prevent poorer households from installing solar panels and more support for community-owned schemes.

The Government’s own independent advisors say the economy must be weaned off of increasingly expensive fossil fuels like gas by investing in clean energy and slashing energy waste. Friends of the Earth’s Final Demand campaign is urging the Government to launch an investigation into the role of the Big Six energy firms in stopping people in Britain having energy we can all afford.

Friends of the Earth’s Executive Director Andy Atkins said:

“These botched and illegal plans have cast a huge shadow over the solar industry, jeopardising thousands of jobs.

“We hope this ruling will prevent Ministers rushing through damaging changes to clean energy subsidies – giving solar firms a much-needed confidence boost.

“Ministers must now come up with a sensible plan that protects the UK’s solar industry and allows cash-strapped homes and businesses to free themselves from expensive fossil fuels by plugging into clean energy.”

“Solar payments should fall in line with falling installation costs but the speed of the Government’s proposals threatened to devastate the entire industry.”

The Government has halved the payments for any solar electricity scheme completed from today, which will almost double the payback period for homes, businesses and communities.

Later this week (Thursday 15 December 2011) Friends of the Earth and two solar companies – Solarcentury and HomeSun – will ask the High Court for permission to challenge Government plans to cut the payments.

The premature cuts could cost up to 29,000 jobs and lose the Treasury up to £230 million a year in tax income, a report commissioned by Friends of the Earth and Cut Don’t Kill – an alliance of solar firms and consumer and environmental organisations – revealed last month. Earlier this month construction firm Carillion warned 4,500 workers their jobs are at risk because of the Government’s proposals.

Countless schemes have already been abandoned, denying cash-strapped homes and businesses the chance to free themselves from soaring fossil fuel prices.

Friends of the Earth’s Executive Director Andy Atkins said:

“These Government cuts will cast a huge shadow over our thriving solar industry and pull the plug on thousands of jobs.

“We don’t oppose modest payment cuts in line with falling installation costs – but the size and speed of these proposals will decimate an industry that could play a key role in weaning the nation off of expensive fossil fuels.

“Ministers must think again and give their support to an industry that could and should be at the cutting edge of a clean energy revolution.”